Foreign direct investment (FDI) in Pakistan witnessed a significant increase of 27.14% in November 2024, reaching $219.2 million compared to $172.4 million recorded in the same month the previous year. This growth marks a positive trend for Pakistan’s investment climate, signaling confidence from international investors despite the economic challenges faced by the country. According to the latest data released by the State Bank of Pakistan (SBP), this increase in FDI reflects the steady inflow of foreign capital into the country.
However, when examining the data on a month-over-month basis, the situation appears more mixed. November’s FDI inflow was 64.54% lower compared to October 2024, which saw an inflow of $133.2 million. This sharp decline in the month-to-month comparison highlights the volatile nature of global investment, as external factors often lead to fluctuations in investment patterns.
Despite this monthly dip, the cumulative FDI for the first five months of the fiscal year (5MFY25) shows strong growth. During this period, total FDI amounted to $1.12 billion, up by 31.26% compared to $856 million recorded in the same period of the previous year. This upward trend is a positive sign for Pakistan’s long-term investment outlook, reflecting a growing interest from foreign investors in the country’s emerging markets and sectors.
One of the key components of FDI is portfolio investment, which involves foreign investment in the country’s equity markets. In November 2024, a net outflow of $59.1 million was observed in the portfolio investment segment under FDI, a sharp contrast to the inflow of $27.5 million in November 2023. This represents a significant shift, with investors withdrawing funds from the equity market. Additionally, portfolio investment saw a marked outflow in comparison to the previous month, which recorded an outflow of $74.4 million.
The foreign private investment segment, which includes both direct investments and portfolio investments, recorded an inflow of $160.1 million in November 2024. While this figure is positive, it represents a decline compared to the $200 million received in November 2023. When compared to the $59 million inflow witnessed in October 2024, however, it reflects a notable improvement, signaling a recovery of sorts in the private investment sector.
In addition to private sector investments, foreign public investment in Pakistan stood at $22.1 million during the review period. This was a relatively modest figure but still contributes to the overall foreign investment tally.
The total foreign investment in Pakistan for November 2024 amounted to $182.2 million, slightly down from $197 million recorded in the same month a year ago. Despite the minor decline, the overall trend of increasing FDI over the first five months of the fiscal year offers optimism for Pakistan’s economic future, especially in attracting international capital to key sectors such as technology, infrastructure, and energy.
In conclusion, while the month-over-month FDI inflows showed a dip, the year-over-year growth in foreign direct investment indicates a positive trajectory for Pakistan’s economic recovery and growth. The increase in FDI for the first five months of FY25 reflects investor confidence in the country’s potential, and it is crucial for the government and policymakers to focus on creating an environment conducive to foreign investment, continuing to build on this momentum moving forward.